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Bear Of The Day: AAR Corp (AIR)

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AAR Corp (AIR - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  Often times you will see the Bear of the Day as a very weak name that has estimates falling after a series of earnings misses.  This is not the case for AIR, which has a solid history of beating the number and has seen a very mild decrease in estimates.  

Description

AAR Corp. is an independent provider of aviation services to commercial and government customers. AAR Corp. aftermarket expertise and award-winning solutions help customers increase efficiency and reduce costs while maintaining high levels of quality, service and safety. AAR Corp. are a trusted partner to airlines, militaries and OEMs delivering competitiveness so they can focus on transporting passengers, cargo and parts around the world.

Beating The Number

A quick check of the earnings history shows that AIR has topped the Zacks Consensus Estimate in each of the last four quarters.  This is not something we see all the time for a Bear of the Day.

Estimates Fall Slightly

The Zacks Rank focuses on earnings estimate revisions, and AIR has a few negative revisions for this quarter, next quarter and the full year.  This quarter has seen a two cent decrease, down to $0.53.  Next quarter has also come in, but by four cents to $0.62 from $0.66.

The full year 2019 estimate is where we see the biggest move.  The Zacks Consensus Estimate has dropped from $2.73 to $2.58 over the last 30 days and that will cause the Zacks Rank to slide.

Valuation

This stock might be ok with the lower estimates as the forward PE of 16x is pretty attractive given the 18% top line growth rate.  A 1.6x book also looks good to me, but some recent weakness in net margins need to be corrected.

Chart

 

AAR Corp. Price and Consensus

AAR Corp. Price and Consensus

AAR Corp. price-consensus-chart | AAR Corp. Quote

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